Phil Fernandez And Marketo's Mission: Eliminate Cold Calling Forever

When he was still a kid, Phil Fernandez loved to paint and sculpt. So much that he devoted 12 years (all the way through college) to such artistic pursuits. Then, armed with a Stanford degree, Fernandez put down the brushes and chisels and "discovered math and computers." He got a job at a software company and never looked back. That was 30 years ago.

Though Fernandez admits he "lost that part of himself," creativity is still a big part of his life. As an entrepreneur who now helms Marketo, a rapidly growing developer of marketing automation software, "Building a company scratches all the same itches. It feels like art," Fernandez tells Fast Company. "Each new stage is new canvas that needs to be painted. Viscerally, it’s the same creative sense."

Rather than take a rococo route and festoon B2B marketing and sales with more unnecessary layers, Fernandez chose to upend the prevailing revenue-generating methodology. By challenging age-old sales wisdom, Marketo cuts the clutter and generates a Mondrian-like simplicity which strips down the selling process right at the start of the prospect stage.

Death of a Salesman

As Fernandez explains in his new book Revenue Disruption: "The cold call is still king. As a result, creating revenue—arguably the most important thing any business does—remains one of its most expensive and inefficient processes. Depending on the industry and its maturity, an organization will likely spend 20 or 30 percent or more of their total revenue on marketing and sales to create more revenue."

That’s a lot of dough, even though most companies can’t even manage all the leads they get. Marketo’s proprietary software helps wade through pools of potential customers to identify the most promising ones. Streamlining this process can increase top line revenue up to 40 percent, he says.

Sound too good to be true? Since Marketo is its own best customer, the company’s numbers speak for themselves. Now just five years old, Marketo’s dominating the marketing automation space with over 1,800 customers, including Intel, Dell, and Kelly Services, as well as a number of small- to medium-sized businesses. Last year Marketo snagged $50 million in funding from Battery Ventures (even though Fernandez wasn’t actively seeking capital). Fernandez says it grew 140 percent between 2010-2011 and he expects another 100 percent increase this year to about $50 million in revenue.

Clean Lines

Beyond Marketo’s buy-in for its own product, Fernandez practices what he preaches in all aspects of his leadership. Meetings, the bane of every corporate entity, are tackled with the same precision as the clutter of cold calling. "I’m not a big rules guy but we don’t allow laptops and phones in meetings so we can talk a lot together about real issues and direction," he says.

Classic Perspective

Far from falling prey to the latest trend, Fernandez prefers to build businesses for the long term, "that have the potential to be valuable and go public, to do something of substance," he says.

As a veteran of two other startup-to-IPO enterprises, Epiphany and Red Brick Systems, Fernandez has seen the wisdom of sticking with a set of core values and getting the staff aligned with them. To grow a business that’s fast and durable, says Fernandez, it’s all about moving the ball forward—even a little bit—and making every day count.

As the company approaches the $60 million revenue range, sustainable growth is hard work. Businesses growing from a great idea to a big company are in their "teen years," says Fernandez, a time when it's easy to get out of balance by focusing on products at the expense of customer support. So he gets his hand in on everything from sales calls to hosting software in the cloud.

Likewise, he says, "When you get to over 100 people [on staff] it’s easy to have people not be on the same page. So I spend a lot of time getting them to stay in harmony." From HR to IT, Fernandez admits he’s "super hands-on" to transmit the culture. "That’s all that matters in addition to innovation and rapid sales," he says adding, "I have an all-star team of execs and I let them run their parts of the game but I’m always around to provide the glue."

Finding a New Medium

Being that involved doesn’t always prevent mistakes. Fernandez ruefully admits that back in 1986 he made a colossal misstep. One of the founders at Cisco had invited him to be employee #5 at that time because he was involved in building routers. "I declined because I concluded the world only needed 2,000 Internet routers. I was too young and clueless," Fernandez says. That oversight became a personal lesson on how to realize disruption that would eventually led him to his present successes. He laughs now, remembering when his mom called in 1992 to chastise him for not being as rich as Bill Gates. "You just got to let it go," he says. "The market is remarkably forgiving. Lives are long and ideas are short."